Getting the right mortgage or remortgage deal can save you £100s each month. But it can be a nightmare knowing how to get it spot on.
To help you navigate through the mortgage maze, here's our guide outlining step-by-step how you can find the best possible mortgage deal for you.
Step 1: Know what type of mortgage you want
Now you're ready to get a mortgage, you need to go about it the right way. There are several things you need to do before you're ready to check out deals:
Step 2: Get a rough idea of what you can get
Whether you're going for a fixed or variable mortgage, you need to start looking at what rates you can get. This will depend on the size of your deposit and the value of the property.
But, in starting your search for the best deal, the first thing you need to know is:
"NEVER just go to your bank for a cheap deal."
Your existing bank will only give you its tiny range of deals, not the array of alternatives, meaning it's highly unlikely you'll stumble across the best one for you.
Step 3: Can a mortgage broker beat it?
You've benchmarked a good rate from the comparison tables, now see if a broker can beat it.
They scour the market to find you a good mortgage deal. By using one, you swiftly cover a huge slew of lenders, and get added clout with them to ease your acceptance as well as an extra layer of protection if things go wrong.
Best Buys: Finding the top UK mortgage brokers
Now you know what you're looking for, as we can't review every mortgage broker in the UK, we've concentrated on some of the big ones that have nationwide scope, plus ways to find smaller brokers. Similarly, if you have any doubts about a broker, find a different one - there's nothing wrong with talking to several before you settle on one.
I've had credit problems in the past - do I need to go to a specialist broker?
If you've had credit problems, whether mild or severe (see the Credit Scores guide), and are trying to sort a mortgage, be very wary of going to the 'specialist poor credit' brokers who advertise everywhere.
These often charge very high fees as customers tend to think that's all they can get. There's absolutely no need to go to a specialist though; most normal brokers (including the ones listed above) also deal with what's called the 'sub-prime' market too, and at the same fee rates that they normally charge.
Am I allowed to speak to more than one broker?
Most brokers only charge upon completion of the mortgage so there’s nothing to stop you getting a second, or even a third, opinion. Two heads are often better than one, so why not try a few brokers and see if any beat the others?
Do check that the brokers don’t submit an Agreement in Principle without your permission as this involves a credit search on your file. Too many of these may actually hurt your credit score, meaning you get a worse deal (see the Credit Scores guide).
The other benefit of this is that different brokers often have exclusive deals from lenders (though there may be a small fee for 'booking' these). The big national brokers have their own deals and local brokers may offer exclusives via 'broker networks' which negotiate deals for them. Always weigh up the benefit of the exclusive deal against any fees.
I've heard some brokers do cashback - how do I get this?
It's worth asking what commission your broker's getting for arranging the mortgage. This should be stated on the last page of the mortgage illustration too - it's likely to be between 0.35% and 0.5% of the mortgage value. So on a £100,000 mortgage, the commission or 'proc' fee they get will be between £350 and £500.
It's worth asking if they're prepared to rebate any of their commission as cashback to you when the mortgage completes, especially if you're paying a fee for their services as well.
You're more likely to be able to strike a deal on larger mortgages (where your fee plus their commission is more than £1,000), but the broker's well within their rights to say no, whatever the final income they get from arranging your mortgage.
Ready to remortgage?
If you want to change mortgage, this free guide has tips on when you should & shouldn’t remortgage and how to grab top deals.
Ready to get a mortgage?
Want to get on that first rung? Our free guide helps you find the cheapest mortgage and boost your chances of getting accepted.
Thinking of buying to let?
Property investing newbie or an old hand wanting the top deal? Our free guide outlines all you need to know about buy-to-let.
Step 4: Check mortgage lenders that brokers miss
If you benchmarked a rate before you went to a broker, and it couldn't beat your rate, then you've probably already done this.
If your broker says it tells you about all deals on the market, this part should already have been done. It may be worth double-checking, but it's likely you've already found the best deal for you.
Don't use the APR to compare - mortgage APR confusion
The best comparison is to use the rate you'll pay for the incentive period in the comparison - and compare over the length of time you think you'll have the mortgage. DON'T compare one mortgage's APR with another.
Step 5: Check your mortgage paperwork
You could start a library out of the amount of paperwork you get sent when you take out a mortgage or remortgage. The main documents you need to be aware of are:
Key Facts Illustration
The Key Facts Illustration does what it says on the tin. It gives you the Key Facts about the mortgage product, not all of them, but all the main ones. You should be given one of these before you make an application and you should check through carefully.
Key Facts illustration checklist
Questions to ask:
- Does it have the Key Facts logo on it?
- Does it have the correct date on it?
- Does it have your name on it?
- Does it state who has created it? This will be your broker's details, or the lender if you’ve gone direct.
- Does it say if you've been recommended the product?
If all of the information's in there, file the illustration and keep it. If some of this information's missing, ask the lender or broker for a new one.
Why do you need to check and keep the illustration?
If you ever have a disagreement with your lender, this document is a crucial piece of evidence that proves what you were recommended, by who and when. Your lender won't keep a copy forever, so keep it somewhere safe as it could be years before you need it again. Scan it, file it, keep it!
The mortgage offer
Once you've successfully applied for a mortgage, you'll be sent a mortgage offer by the lender. This gives ALL the facts about the mortgage and the conditions on the loan that you are agreeing to.
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Step 6: Watch out for the hard sell
Some lenders and brokers try to make more money elsewhere in the mortgage process. So be prepared for the hard sell on these products.
Mortgage payment protection insurance (MPPI)
Sometimes called accident, sickness and unemployment insurance (ASU), MPPI is supposed to cover your payments if you have an accident, become ill, or you're made redundant.
Bundled buildings / contents insurance
All lenders will insist you take out buildings insurance. But be very suspicious of deals which insist you buy your buildings insurance through your lender. While the amount quoted may seem reasonable in the first year, you're then trapped into accepting whatever premium increases they foist on you in subsequent years, for as long as the mortgage lasts.
Life cover from your mortgage seller
Would you ask the man who sold you a computer to be your fashion stylist? No, so don't assume just because someone sold you one financial product, they'll automatically get you a good deal on extra bits such as life cover or other insurance.